Blockchain technology and the Media & Entertainment Industry: Use Cases and Key Takeaways by Katharina Toma
The media & entertainment industry places a premium on the protection of intellectual property. However, with content having gone digital over the last two decades, the ability to protect and monetise this IP has become more difficult. One way to approach this problem is through the use of blockchain. To those who are unfamiliar with this technology, to put it simply, it is a cryptographically secure distributed ledger technology that is programmed to record and track anything of value. It uses complicated algorithms and a system of decentralised computing power to create an unchangeable digital database, known as a ledger, which no single user controls and which can be inspected by anyone. Blockchain’s key characteristics of immutability, a lack of intermediaries, and the ability to timestamp make this technology particularly apt for the media & entertainment industry. Outlined below are three use cases of the technology in this industry to be aware of.
USE CASES OF BLOCKCHAIN TECHNOLOGY IN THE MEDIA & ENTERTAINMENT INDUSTRY
- Micropayments for the consumption of content
Today’s media consumers are accustomed to having access to a wide variety of content, from YouTube and Amazon Prime to Disney+ and Netflix, to name just a few. Covid-19 has further influenced the way in which we consume content. Initially, subscriptions to streaming services rose during lockdown, however many are now choosing to cancel these. As consumers feel a sense of streaming service overload, some have become reluctant to pay subscription fees for premium content behind paywalls. Here, an opportunity for a pay-per-use and consumption-based model presents itself. Micropayments implemented through blockchain technology allow consumers to access and pay for bite sized chunks of content without having to commit to recurring subscriptions. For example, consumers can pay a smaller fee for single read of article or binge watch a single show. Such payments would be facilitated through blockchain-based cryptocurrencies, permitting transactions as small as fractions of cents. This type of micropayment pricing system can help content platforms monetise this flexibility-seeking group of customers without disproportionate transaction costs, leading to increased profits for content creators and media companies.
- Secure file sharing between consumers
With the digitisation of content, media companies and content creators have suffered significantly from illegal file sharing, especially since content can now be copied and distributed quickly without loss of quality. The exchange of media files is almost impossible to control due to the vast number of both exchanges and users exchanging content. To address this issue, another promising use case of blockchain technology within the industry is the ability to track file sharing between consumers. This allows content creators to maintain better oversight of copyrighted material. Once a piece of copyrighted material is registered to a blockchain-based platform, the immutable and append-only nature of the technology records every usage of that piece of content. If the file is shared without permission after a consumer has purchased or subscribed to the blockchain-hosted content, it will be flagged for the owners to track and then charge a fee for that distribution. Not only does this enable content owners to have full control and visibility over the consumption of their media, this use case creates additional sources of revenue for both content creators and media companies.
- Record keeping and intellectual property rights management
Another particular issue within the media & entertainment industry pertains to the ownership and intellectual property management of content. Copyright is unregistered and arises automatically upon creation of an original work. Currently, information concerning films, music or other works is scattered across a number of centralised databases of publishers, record companies or collecting societies. No central database of works exists, which can make it difficult to prove ownership of the original work. Blockchain technology could bring some much-needed transparency to the world of copyright and is key to successfully managing intangible assets. Any information about a copyrighted work can be recorded and securely time-stamped on a blockchain, which allows interested parties to know without any doubt that the work in question existed at a particular date and time. This is especially useful for proving authorship and resolving disputes in this area. Any uses of the work could also be added to the chain, including records of assignment and licences. The benefit of using this technology has already been picked up by a number of media & entertainment organisations. In the music industry, Spotify acquired blockchain start-up Mediachain, which had developed a decentralised media library to better identify rights holders of songs for the distribution of royalty payments. Furthermore, three of the largest collection societies in the world – ASCAP, SACEM, and PRS for Music – are working in partnership to develop a shared system of managing copyright information using blockchain. In film and television industry, FilmChain is a platform that helps independent creators of visual media collect revenues and make payments through a secure Ethereum blockchain. Ultimately, the use of this technology leads to increased efficiency and transparency, not only when distributing royalties to artists or managing revenue streams, but also in cases of intellectual property audits and due diligence investigations.
ARE THERE ANY LIMITATIONS TO USING BLOCKCHAIN TECHNOLOGY IN THE MEDIA & ENTERTAINMENT INDUSTRY?
Blockchain technology certainly has a place in the media & entertainment industry. However, as with any emerging technology, it does not come without challenges. To create certainty between parties implementing blockchain technology into their products and platforms, laws and common standards are needed. Currently, the technology is not regulated. This means that, despite the promising use cases of blockchain, key players may be put off the technology altogether due to lack of a comprehensive legal framework. Some jurisdictions, such as Malta, have been at the forefront of adopting blockchain-related legislation. By introducing a number of blockchain-related bills primarily focused on registration and certification of decentralised ledger technologies, the Maltese government has ensured that blockchain gains a meaningful place amongst regulated industries. It remains to be seen if the UK will follow suit on this matter, and the impact it would have on the media & entertainment industry.
Another challenge facing the use of the technology in the media & entertainment industry is that there are certain incompatibilities between data protection principles and the core features of blockchain. If personal data is processed, for example through micropayments or when recording copyrighted work on a blockchain, data subjects have a number of rights in relation to that data under the GDPR. One of these rights is known as ‘the right to be forgotten’, allowing data subjects to request the erasure of their personal data in certain circumstances. Blockchain’s immutable and modification-resistant nature presents a challenge, as even a simple deletion request by the data subject may not be possible. As such, the enforcement of data protection principles may not be feasible and media companies may not wish to implement the technology in fear of any undue litigation in case of infringement.
Finally, it should be noted that certain uses of blockchain technology require vast amounts of energy consumption, negatively impacting the environment. For example, studies have found that the computational process involved in mining Bitcoin consumes more energy per year than the entire nation of Argentina. Users of this cryptocurrency in the media & entertainment industry, for example within micropayments for the consumption of content, should consider that blockchain technology is potentially causing increased carbon emissions through the use of non-renewable energy and contributing to climate change. As such, it is important to explore greener sources of energy and less energy-demanding computation when implementing blockchain technology in the media & entertainment industry.
CONCLUSION AND KEY TAKEAWAYS
Blockchain technology has the potential to have a fruitful impact on the media & entertainment industry. Platforms can monetise content through blockchain-powered micropayments, allowing for a more flexible pricing system to increase revenue. Better oversight of content for creators and media companies is also possible, with sharing of content by consumers being tracked on a secure blockchain. Finally, copyrighted works can be catalogued and securely time-stamped on a blockchain, increasing transparency and efficient when managing intangible assets.
Whilst blockchain must overcome certain challenges, the technology should be borne in mind by companies when assessing their future business strategy. Companies using blockchain can potentially get a step ahead in the media & entertainment industry, allowing them to operate more efficiently, increase revenue streams and offer innovative business models to give them a competitive edge.